Siblings disagreeing on listing price on inherited home

[JP.mpls]

Daylatedollarshort said:
"Realtors make more money by moving more houses, not by holding out for top dollar when they only get 6% of the extra money."

I believe the listing agent actually only gets 1.5%

I have no expertise in real estate, but I totally agree with your thoughts on this.

The realtor's payout when you get a low/average/high price for your property doesn't change that much. Their incentive is to list and sell the property as fast as possible, and move onto the next listing.

I think it is a major flaw in the existing system, and the only good strategy is to try selling your property without them. Most people are better off just playing the game.

If they list it very low, there is a chance they might just get low offers. I personally would lean a little higher, and be patient.

Take care, JP

 

[Brat]

The family member who is spiffing up the house should make an appointment with several realtors and ask for a marketing plan from each. I wouldn't choose the realtor with the most optimistic (aggressive) plan, consider the middle proposal. Then ask for references. Contact those who sold/purchased in the neighborhood and ask them about their experience.

There is a lot of money on the table here, spend time to find the best representative.

 

[freedomatlast]

Take a few pictures and spend a few minutes writing up a description. Post it on Zillow. Cost is $0. Schedule showings 2 hours apart. No need to pay a realtor in such a hot market. Easy way to save $50,000+. Did this one year ago when realtors weren't allowed to go into houses due to Covid. Sold in one day. The buyer appreciated being able to talk directly to the owner instead of having to run everything through a third party.

 

[RetireeRobert]

Realtor in my area at an open house I went to today found out I am downsizing from 3200 sq ft acreage home. Immediately said he could sell it at 3 or 3.5% commission instead of 6%. Said writing up an order for $800,000 or $900,000 house took no more effort than one for $300,000. Said he felt guilty on the higher end homes taking an "extra" $15,000, or $20,000, or $25,000--or more-- for no more work, and basically just writing an order!!

So some realtors are ready and willing to discount commissions in this extraordinary market.

 

[ivinsfan]

Realtor in my area at an open house I went to today found out I am downsizing from 3200 sq ft acreage home. Immediately said he could sell it at 3 or 3.5% commission instead of 6%. Said writing up an order for $800,000 or $900,000 house took no more effort than one for $300,000. Said he felt guilty on the higher end homes taking an "extra" $15,000, or $20,000, or $25,000--or more-- for no more work, and basically just writing an order!!

So some realtors are ready and willing to discount commissions in this extraordinary market.

Hold on ..the buyers broker gets some money and the sellers broker get some money..What exactly did he offer to cut out of his end.. I'm pretty sure he didn't offer to do it for free.

 

[Starsky]

Right now there is such a lack of supply that the house will find the market equilibrium price regardless of the starting price. Back a few years ago when multiple offers were common, lots of realtors were pricing homes with an expected range of selling prices and soliciting offers over above the low price. Today is no different demand-wise. It must be frustrating looking at comps and trying to learn anything.

Don't let your family get too bent out of shape on setting the advertised pricing. It's not the final price that the property will likely sell for. You'll all have the choice to sign off on the offers that come in. Everyone seems to be making their arguments in good faith and has the same ultimate goal - to get the best selling price for the property. Best to let the most experienced/local person handle it and let the chips fall where they may. In this seller's market, the outcome will probably make the issue moot in the end.

 

[2HOTinPHX]

Hold on ..the buyers broker gets some money and the sellers broker get some money..What exactly did he offer to cut out of his end.. I'm pretty sure he didn't offer to do it for free.

He is probably offering to sell as an exclusive sale which means no 3% commission available to any buyers agent. If someone who is working with a buyers agent already wanted to buy the house they would have to pay their agent for their services. So most realtors would not bother showing the home to their clients.
Limits the availability of buyers but may work in a hot market. We did this back in 2005 and think it worked out. We still had multiple offers on the first day of showing for well over asking price.

 

[2HOTinPHX]

Right now there is such a lack of supply that the house will find the market equilibrium price regardless of the starting price. Back a few years ago when multiple offers were common, lots of realtors were pricing homes with an expected range of selling prices and soliciting offers over above the low price. Today is no different demand-wise. It must be frustrating looking at comps and trying to learn anything.

Don't let your family get too bent out of shape on setting the advertised pricing. It's not the final price that the property will likely sell for. You'll all have the choice to sign off on the offers that come in. Everyone seems to be making their arguments in good faith and has the same ultimate goal - to get the best selling price for the property. Best to let the most experienced/local person handle it and let the chips fall where they may. In this seller's market, the outcome will probably make the issue moot in the end.

Yes thanks for the feedback. That's plpexactly what I am thinking. In the end regardless of starting price the market will determine the current value

 

[skyking1]

I go through the thread and I get the impression that lowering your ask is the same as cutting off your arm.
Start higher. Lower as needed.

 

[rodi]

Bidding wars are a real thing - but you've got a pretty big delta in pricing between the low price the realtor/friend of your sibling is suggesting and the redfin/zillow estimates.

I would list it with a $1, in front - because that sounds like the range it's in. If you list it with a $9 in front you are likely to get buyers who do not want to go above $1M.

It will probably still get a bidding war if you list it at the redfin price... but the starting point of the bidding war is higher.

I've been following San Diego real estate pretty closely and things are definitely super heated. I live in a neighborhood of 60 year old tract homes... I am SHOCKED by how much people are paying for them. I can only imagine the extreme sales prices are on steroids in the Bay area.!

 

[lucky2030]

You need to think of the listing price as part of the marketing, not what you expect to get. That said, you don’t want to go too low, and you seem about 10% too low.

 

[CaliKid]

Have it appraised by two different appraisers. Use the mid-point.

Appraisers look at the past and in this market can be way behind. Realtors look at the future. I would recommend talking to two Realtors not two appraisers.

 

[daylatedollarshort]

One thing to keep in mind is if you use a realtor and price it too low, and then say something happens like interest rates rise or there is an earthquake, and the bidding wars stop, depending on your contract you may be legally obligated to accept the lower bid, or at least pay the realtor the commission in the contract on the lower bid.

If home prices can rise 10% in one month here, then it seems possible they could go down 10% a different month. Just some food for thought.

 

[skyking1]

The reason I strongly suggest a higher ask is all about family dynamics. If one or more are thinking it is too low and you get a flurry of lowball or near asking price offers, the pressure is on to just get it over with.
Now you have a setup for resentment and hard feelings. I am not saying it is all singing and happiness among siblings, but there is no need to set yourselves up.
We went through all this with DW's brothers, and one of them went to the grave estranged from her.

 

[2HOTinPHX]

The reason I strongly suggest a higher ask is all about family dynamics. If one or more are thinking it is too low and you get a flurry of lowball or near asking price offers, the pressure is on to just get it over with.
Now you have a setup for resentment and hard feelings. I am not saying it is all singing and happiness among siblings, but there is no need to set yourselves up.
We went through all this with DW's brothers, and one of them went to the grave estranged from her.

Appreciate all the suggestions and feedback from everyone here. My intention starting this conversation was to gain some insight from others and especially those who have been in our shoes. My hope was to come to some compromise where everyone was in agreement. Unfortunately I fear my attempts to reach common ground only separates us more unfortunately.

 

[ivinsfan]

Appreciate all the suggestions and feedback from everyone here. My intention starting this conversation was to gain some insight from others and especially those who have been in our shoes. My hope was to come to some compromise where everyone was in agreement. Unfortunately I fear my attempts to reach common ground only separates us more unfortunately.

That's not good...but as they say, the squeaky wheel gets the grease. If one outlier sib is balking you don't all have to follow their dance. Don't let yourself get caught in the middle of sibling war, all you try to do is help and everyone is mad at you.

 

[RetireeRobert]

Hold on ..the buyers broker gets some money and the sellers broker get some money..What exactly did he offer to cut out of his end.. I'm pretty sure he didn't offer to do it for free.

He said 2.5% to buyers broker, and .5 or 1% to sellers broker.

 

[ivinsfan]

He said 2.5% to buyers broker, and .5 or 1% to sellers broker.

Was he hoping to have you as a client on the smaller home? Then he could get up to 4% total on the sale of two homes. He'd come out fine.

 

[RetireeRobert]

Was he hoping to have you as a client on the smaller home? Then he could get up to 4% total on the sale of two homes. He'd come out fine.

Not sure what he hoped from me, other than get me to list my more expensive larger home on the market for sale, if nothing else. His point was homes are selling so rapidly like hotcakes, agents are making boatloads just "writing up the orders". I had to agree with him, 6% for selling in this market? Why?

But then again, I had never heard of this agent before, and his business card listed no address for the brokerage, only gave his cell number. And he was wearing hippy sandals.

 

[MrsHaloFIRE]

In my area there are so few houses on the market and so many realtors I would say it would be very easy to get lots of estimates and compete on commission. Im in TX not the bay area though

 

[Texas Proud]

Let’s assume the house sells for $500K. I know it’s probably way more than that, but at 5% commission, that’s $25K. Maybe it’s just me, but if I was going to pay someone $25K (insert your real number here), I think I’d listen to them. Generically speaking, don’t you think the RE knows best?

My gut tells me that it doesn’t matter. Since there will be significant interest, you’ll figure out what the top of the market is no matter which end you start at.

One of the flaws with that thinking is the RE agent has a bigger incentive to sell low and get the money sooner with much less time and trouble selling the house... remember that if it sells for $200,000 less he is out only $10K and you are out $190K... he has moved on to the next one and you do not have another to make up the difference...

 

[2HOTinPHX]

One of the flaws with that thinking is the RE agent has a bigger incentive to sell low and get the money sooner with much less time and trouble selling the house... remember that if it sells for $200,000 less he is out only $10K and you are out $190K... he has moved on to the next one and you do not have another to make up the difference...

Wow good point....

 

[Music Lover]

One of the flaws with that thinking is the RE agent has a bigger incentive to sell low and get the money sooner with much less time and trouble selling the house... remember that if it sells for $200,000 less he is out only $10K and you are out $190K... he has moved on to the next one and you do not have another to make up the difference...

$200k difference is an extreme example. Selling a $500k house for $480 to get rid of it in a couple days is more realistic. In that case on a 5% commission the agent earns $25k vs $ 24k. If they split the commission with a buyers agent it's $12.5 vs. $12k.

The agent can work 10 hours to earn $12,500 or 30 hours to earn $12,000. And if they're going to average 30 hours of work a week would they rather sell 1 house or 3 houses?

 

[2HOTinPHX]

$200k difference is an extreme example. Selling a $500k house for $480 to get rid of it in a couple days is more realistic. In that case on a 5% commission the agent earns $25k vs $ 24k. If they split the commission with a buyers agent it's $12.5 vs. $12k.

The agent can work 10 hours to earn $12,500 or 30 hours to earn $12,000. And if they're going to average 30 hours of work a week would they rather sell 1 house or 3 houses?

There are so so many agents out there are the really selling three a week?

 

[Music Lover]

There are so so many agents out there are the really selling three a week?

Probably very few. My example was extreme but the point was that there's no incentive to work twice as long to earn 5% more commission.